The United States Congress has reached a bipartisan agreement to expand the child tax credit and provide tax breaks for businesses. This $78 billion tax agreement, negotiated between House Ways and Means Chair Jason Smith and Senate Finance Chair Ron Wyden, aims to provide relief to American families, strengthen Main Street businesses, enhance competitiveness against China, and create jobs.
Enhancing the Child Tax Credit
One of the key provisions of the tax deal is the enhancement of the child tax credit. The agreement seeks to provide greater tax relief to families facing financial difficulties and those with multiple children. By lifting the refundable cap of $1,600 and adjusting it for inflation, the new child tax credit policy will benefit approximately 16 million children in low-income families.
According to an analysis by the liberal-leaning Center on Budget and Policy Priorities, this expansion will significantly reduce child poverty. In its first year, the expansion is projected to lift as many as 400,000 children above the poverty line, while simultaneously improving the economic situation for an additional 3 million children.
A Big Deal for American Families
Democrats, who had previously passed a temporary version of the child tax credit, were adamant about securing a larger credit to combat child poverty. The new agreement, though providing smaller benefits compared to the monthly payments under the American Rescue Plan, is expected to have a positive impact on 15 million children from low-income families.
Senate Finance Chair Ron Wyden expressed his satisfaction with the plan, stating, “Given today’s miserable political climate, it’s a big deal to have this opportunity to pass pro-family policy that helps so many kids get ahead.”
Reviving Tax Breaks for Businesses
In addition to the child tax credit expansion, the tax deal also revives certain tax breaks for businesses that had expired. Republicans were particularly motivated to revive portions of the 2017 Trump tax cuts. The agreement includes provisions such as expensing for research and experimental costs, restoration of an earlier interest deduction, an expansion of small-business expensing, and an extension of bonus depreciation.
These measures aim to support businesses and encourage innovation and growth in the economy. By providing tax breaks and incentives, Congress seeks to boost entrepreneurship and enhance the competitiveness of American businesses.
Timeline and Implications
Senate Finance Chair Ron Wyden aims to pass the tax deal by the beginning of the tax filing season, which is set to begin on January 29. However, the passage of the deal is not guaranteed, as Congress is currently juggling other priorities, such as averting a government shutdown and completing the funding process by March.
If the deal is successfully passed, it would be a rare achievement for a divided Congress that has been historically unproductive. Wyden emphasized his commitment to getting the deal passed in a timely manner, stating, “I’m going to pull out all the stops to get that done.”
See first source: CNBC
FAQ
1. What is the purpose of the bipartisan tax agreement reached in Congress?
The bipartisan tax agreement, totaling $78 billion, aims to achieve several goals, including expanding the child tax credit, providing tax breaks for businesses, offering relief to American families, strengthening Main Street businesses, enhancing competitiveness against China, and creating jobs.
2. How does the tax deal enhance the Child Tax Credit?
One of the key provisions of the tax deal focuses on enhancing the child tax credit. It removes the refundable cap of $1,600 and adjusts it for inflation, which will benefit approximately 16 million children in low-income families.
3. What impact is expected from the expansion of the Child Tax Credit?
The expansion of the Child Tax Credit is anticipated to have a significant impact on reducing child poverty. In its first year, it could lift as many as 400,000 children above the poverty line and improve the economic situation for an additional 3 million children.
4. Who advocated for the expansion of the Child Tax Credit?
Democrats, who had previously passed a temporary version of the child tax credit, were strong proponents of securing a larger credit to combat child poverty.
5. How does the tax deal support businesses?
In addition to the Child Tax Credit expansion, the tax deal revives certain tax breaks for businesses that had expired. These provisions include expensing for research and experimental costs, restoration of an earlier interest deduction, an expansion of small-business expensing, and an extension of bonus depreciation. These measures are designed to support businesses, encourage innovation, and stimulate growth in the economy.
6. What is the timeline for passing this tax deal?
Senate Finance Chair Ron Wyden aims to pass the tax deal by the beginning of the tax filing season, which starts on January 29. However, its passage is not guaranteed, given other congressional priorities such as averting a government shutdown and completing the funding process by March.
7. Why is this tax deal considered significant?
This tax deal is regarded as a significant achievement, especially for a divided Congress that has historically struggled with productivity. Senate Finance Chair Ron Wyden has expressed his commitment to expediting the deal’s passage, emphasizing its importance in supporting American families and businesses.
Featured Image Credit: Photo by Alexander Mils; Unsplash – Thank you!
